Research work involves designing new experiments to
understand the factors that magnify and reduce financial bubbles. This work has
been in collaboration with V. Smith, D. Porter and V. Ilieva.
Our previous experiments have shown
that excess cash in the system and momentum due to initial undervaluation both
result in larger bubbles.Another factor
that inflates bubbles is the absence of an open book.If trader can see the full array of bids and
asks, then it becomes evident at an earlier stage that the bids are thinning
out even though prices continue upward.